EUR/USD has been quite impulsive with the recent bearish momentum after rejecting off the 1.1250 area with a daily close. The US dollar is stronger agains the euro despite the worse-then-expected economic reports from the United States and trade war tensions by side.
The eurozone is struggling with the economic slowdown and the upcoming European Union Elections can influence Brexit. The parliamentary election is expected to have a high impact on the single European currency which might lead to certain indecision and volatility in the market. Eurosceptic parties are widely expected to make a strong showing, which could hamper approval of the next European Commission President and budget.
What is more, the EU Inflation rate has not met the ECB target yet but an uptick to 1.7% from 1.4% indicates positive changes as now the rate is closer to 2%. On Thursday, the French Flash Services PMI report is going to be published which is expected to have a slight increase to 50.7 from the previous figure of 50.5. Besides, the French Flash Manufacturing PMI is expected to grow to 50.1 from the previous figure of 50.0. Further on, experts predict that the German Flash Manufacturing PMI will rise to 44.9 from the previous figure of 44.4 but the German Flash Services PMI is expected to decrease to 55.2 from the previous figure of 55.7. Additionally, the ECB monetary policy meeting accounts report is also going to be published which may inject volatility.
On the USD side, trade tensions remain a sore point for market participants as well as the renewed concerns over the US-China trade war which has gone the wrong way. The US has held back from escalating the trade war on the Japanese and European fronts. However, US President Donald Trump stated that the European Union was less fair to the United States in trade relations than China. This week a number of FOMC members including Clarida, Evans, Rosengren and Williams are going to speak about the upcoming monetary policies and the interest rate decision. However, their speeches are likely to have a neutral effect.
This week, a fresh round of economic data will be closely watched at a time when markets are trying to gauge the impact of the trade conflict on the outlook for growth, both in the US and the global economy. The US is to publish reports on durable goods orders and data on both existing and new home sales.
As of the current scenario, this week the pair is expected to be quite volatile and corrective which might lead to certain indecision and non-definite trade momentum in the process. The US dollar is having several events to be taken care of, so the European Parliament Election may have a minor impart on it. Despite some pullbacks, USD is still the stronger currency in the pair and can sustain the momentum in the process.
Now let us look at the technical view. The price is currently falling lower at the edge of 1.1150 area from where it is expected to reach 1.0950-1.1050 support area before any bullish intervention can be observed along the way. As the preceding trend is bearish, so as the momentum, the bearish bias is expected to continue until any daily close. At the same time, the strong bullish counter-trend is observed along the way from support areas.
